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Informist, Thursday, Jan. 9, 2025

 

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--TCS Oct-Dec consol net profit INR 123.80 bln vs INR 119.09 bln qtr ago
--Analysts saw TCS Oct-Dec consol net profit INR 122.74 bln
--TCS Oct-Dec consol revenue INR 639.73 bln vs INR 642.59 bln qtr ago
--TCS Apr-Dec consol net profit INR 363.29 bln vs INR 334.74 bln year ago
--TCS to pay INR 10 per shr interim dividend, INR 66 per shr special dividend
--TCS Apr-Dec consol revenue INR 1.908 tln vs INR 1.797 tln year ago
--TCS Oct-Dec consol BFSI revenue INR 234.81 bln vs INR 237.85 bln qtr ago
--TCS Oct-Dec consol mfg revenue INR 61.94 bln vs INR 63.10 bln qtr ago
--TCS Oct-Dec consol sales up 4.5% on year in constant currency
--TCS Oct-Dec consol operating margin 24.5%, up 40 bps on qtr
--TCS Oct-Dec consol consumer business revenue INR 100.35 bln
--TCS Oct-Dec order book total contract value $10.20 bln
--TCS Oct-Dec consol communication, media, tech revenue INR 119.89 bln
--TCS Oct-Dec BFSI segment revenue up 0.9% on yr in constant currency
--TCS Oct-Dec consol life sciences, healthcare revenue INR 64.26 bln
--TCS Oct-Dec revenue from BFSI segment 30.5% of sales vs 31.7% year ago
--TCS Oct-Dec consumer segment sales up 1.1% on year in constant currency
--TCS Oct-Dec revenue from consumer segment 15.3% of sales vs 15.7% year ago
--TCS Oct-Dec manufacturing sales up 0.4% on year in constant currency
--TCS Oct-Dec revenue from manufacturing ops 8.4% of sales vs 8.7% yr ago
--TCS Oct-Dec North America constant currency sales down 2.3% on year
--TCS Oct-Dec UK revenue up 4.1% on year in constant currency
--TCS to invest INR 16.25 bln in promoter's two entities to buy land
--TCS total employee count 607,354 as on Dec 31
--TCS Oct-Dec IT services trailing 12-mo attrition 13.0% vs 12.3% Jul-Sept
--TCS Oct-Dec employee expenses INR 359.56 bln vs INR 366.54 bln qtr ago

 

By Anjana Therese Antony

 

MUMBAI – Blue-chip information technology player Tata Consultancy Services Ltd.'s Oct-Dec top line declined for the first time in 18 quarters amid furlough headwinds and cross-currency volatility, though the company's bottom line grew after two consecutive quarters of decline. Analysts had said a possible deal ramp-down from client Bharat Sanchar Nigam Ltd. could also weigh on the IT giant's top line for the near term.

 

"BFSI (banking, financial services, and insurance) and CBG (consumer business group) returning to growth, continued stellar run of regional markets, and early signs of revival in discretionary spend in some verticals give us confidence for the future," Chief Executive Officer and Managing Director K. Krithivasan was quoted as saying in a press release.

 

The Mumbai-based company's consolidated revenue from operations declined nearly 0.5% to INR 639.73 billion, also failing to meet analysts' expectation of INR 640.70 billion by a slight margin. Its consolidated net profit, or profit attributable to shareholders, of INR 123.80 billion was up nearly 4% from a quarter ago and also marginally higher than the INR 122.74 billion the Street had expected. 

 

From a year ago, the top line grew 5.6% and the bottom line rose 12%. TCS has posted on-year growth in revenue for at least 37 quarters now. The company announced an interim dividend of INR 10 per share and a special dividend of INR 66 per share. The record date for the dividend is Jan. 17 and the payment would be made on Feb. 3.

 

India's largest IT company by market capitalisation also said it will invest INR 16.25 billion in TRIL Bengaluru Real Estate Five Ltd. and TRIL Bengaluru Real Estate Six Ltd., two subsidiaries of its promoter, to acquire land for building delivery centres. The transaction is expected to be completed in a year, it said.

 

In constant currency terms, the IT behemoth's revenue grew 4.5%. For the nine months ended December, TCS's consolidated net profit was INR 363.29 billion on a revenue of INR 1.908 trillion. The company's total contract value was $10.2 billion as of Dec. 31, compared with $8.6 billion three months ago.

 

The company's operating margin, calculated as earnings before interest and tax margin, expanded 40 basis points from the previous quarter to 24.5%, though it fell 50 bps from the year-ago period. "In a quarter that saw significant cross-currency volatility, TCS's strong execution, cost management, and deft currency risk management helped deliver healthy margin improvement and free cash flows," Chief Financial Officer Samir Seksaria was quoted as saying in the press release. Analysts had said the depreciation of the rupee and operating efficiencies, coupled with deceleration in BSNL deal-related costs and wage hikes in Apr-Jun, could push margins higher after seeing weakness in the previous quarter. On Dec. 31, the rupee was at a record closing low of 85.6150 a dollar on recurring demand from importers. Broking firms had anticipated the company's operating margin to be between 24% and 25% during the December quarter. 

 

GEOGRAPHY, SEGMENT

While there were signs of recovery in the company's biggest vertical, BFSI, with revenue from the segment growing nearly 1% on year in constant currency terms, its contribution to the company's overall sales declined slightly to 30.5%, from 31.7% a year ago. The segment's revenue fell slightly to INR 234.81 billion from INR 237.85 billion a quarter ago.

 

The revenue of the company's consumer business vertical grew likewise over 1% in constant currency terms, but its contribution to total revenue also fell slightly, to 15.3% from 15.7% in the corresponding period a year ago. The sales of this vertical were down slightly to INR 100.35 billion from INR 100.25 billion in the previous quarter.

 

Of all the seven verticals of the company, revenue from three segments--life sciences and health care, technology and services, and communications and media--in constant currency terms fell from the previous year. These three businesses together account for nearly a quarter of the company's overall revenue. Also, sales contributions from these three operations declined from the year-ago period.

 

Coming to the geographies in which the company operates, revenue from North America declined 2.3% on year in constant currency terms, while that from Latin America rose 7%. North America accounts for nearly half of the company's total revenue, currently 47.7% of sales against 50.6% a year ago.

 

In the UK, which is the company's second-highest revenue-generating region, TCS saw over 4% growth in sales in constant currency terms. The region's revenue contribution increased slightly to 16.6% of the total in the latest quarter, compared to 16.4% in the previous year.

 

India, which accounts for nearly 10% of the company's revenue, saw a whopping 70.2% rise in sales in constant currency terms. Its revenue contribution increased to 9.8% in Oct-Dec from 6.1% a year ago, registering the fastest growth in any region during this period.

 

HUMAN RESOURCES

The workforce strength of TCS declined to 607,354 as of Dec. 31 from 612,724 three months ago. Its last 12-month IT services attrition rate rose to 13% from 12.3% in the previous quarter. "We promoted over 25,000 associates this quarter, which brought the total promotions this financial year to more than 110,000," Chief Human Resource Officer Milind Lakkad said in the press release. "Our campus hiring for the year is going according to plan and preparations are afoot to onboard a higher number of campus hires next year." 

 

The company spent INR 359.56 billion on employee benefit expenses, down nearly 2% on quarter but up 3.6% on year. The metric fell sequentially after three consecutive quarters of increase.

 

On Thursday, shares of TCS closed 1.7% lower at INR 4,038.85 on the National Stock Exchange ahead of the earnings. The stock has fallen over 3% in the past seven days and 9% in 30 days.  End

 

US$1 = INR 85.84

Edited by Rajeev Pai

 

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